Retirement calls for money; first and foremost
Insurance is normally intended to cover the risk of an earning member departing early. That is not the big challenge today. Thanks to good healthcare and better nutrition, people are living much longer. That means they are spending a lot more time living out of what they have earned rather earning. The question is whether you are really prepared to accept this fact. Most parents cannot mentally accept that their children would not have the time and resources for them. The answer is that everyone needs to seriously have an organized plan to fall back upon post retirement.
Here are 3 mantras to follow.
Mantra 1: Start planning your retirement when you are in your twenties
That may sound a tad ironical but it is essential. Retirement is a long term plan and relies on making money work hard. The longer you have to plan, the longer you stay invested. Also, when you start at a young age you can take on higher risk of equity investing. That will be value accretive for your portfolio in the long run. There is one more advantage of starting early. Your financial plan may face setbacks due to your own financial condition, new responsibilities, changes in the market place, investment performance etc. When you start early, you have the leeway to activate Plan-B.
Mantra 2: Total insurance is a must post retirement
Post retirement, ideally your financial responsibilities towards your family should be more or less over and you would have repaid all your liabilities. Hence, life insurance may not really have much of significance for you at that point of time. But the other insurance covers become a lot more relevant. For example, medical cover at a family level is a must and this must cover you and your spouse. Look at critical care cover so that these critical illnesses don’t disrupt your cash flows. You are hoping to live a life of comfort and care in your home, and hence, your home must be insured against forces of nature. You can also go a step further and get your appliances and assets insured.
Mantra 3: Make fruitful use of your long retirement
We often tend to think of retirement as the end of our careers. On the contrary, it can open new career vistas. As long as you are in good health, it is advisable to keep yourself professionally active. If you built robust networks during your working days then leverage opportunities for yourself. You may not really want a 9-to-5 job but there are areas like consulting, content management, review projects that you can do from your home. You keep yourself active and feel young, apart from making money.
You can also consider investing in Mutual Funds while planning your retirement by opting for customised recommendations with IIFL's Financial Plan 360. The modern ecosystem does not provide people the resources and the time to be able to take care of their parents. It is much smarter to realize that early and plan accordingly.